by James Cheow, Capital C’s CEO & Co-Founder

A new model for personal and small-business borrowing

Modern companies are waking up to the wider impact of their business on society, the economy, and the planet itself.  No longer is it sufficient for a business to devote its efforts purely to the bottom line – now there is a much greater focus on how it applies its values – driving all of its practices and its ability to service its client base and nurture its stakeholders.  This trend is driving a longer-term, holistic outlook which is transforming businesses.

An ethical trend

Listed companies around the world are now required to report their impact according to a range of ESG (environmental, societal, corporate governance) factors, and this trend is having a significant bearing on investment: the growth of more socially-responsible products give investors the choice to allocate funds to companies that do less harm to society or the planet.  This approach acknowledges society’s changing values and also enables investors to influence outcomes by rewarding policies and practices they approve of.

For those who provide lending products and services for smaller businesses, a similar process of empowerment is driving a growing focus on customer experience and client journeys – a qualitative and long-term view which prioritises clients’ needs.  And this is where alternative lending companies in Singapore have an impact: we provide new ways for participants in the economy underserved by traditional lenders to access capital in a transparent, responsible, ethical and seamless manner. In the short term, this relieves cash-flow pressures on sole traders and businesses; in the longer term, it can raise communities’ quality of life and provide a significant boost to the larger economy.

A responsible approach to lending    

Accessing capital for those who need it urgently should be simple rather than onerous. Companies need the right support to help them realise their aspirations and prosper, and not tied into an exploitative relationship.

In Singapore, SMEs account for around two-thirds of the workforce and a large chunk of GDP growth. In 2018, roughly 219,000 SMEs contributed S$196.8 billion to the economy; between 2013 and 2017, SMEs generated half of the nation’s growth.  The average Singapore SME in employs 10 people and adds S$900,000 to the economy every year.

Even smaller businesses, the micro small and medium enterprises (SMSEs), are a key part of this ecosystem, with a similar need to access working capital that can sustain their operations and help them grow.  Lacking the scale to access traditional bank financing, these businesses’ failure to thrive has a choking effect on the economy. By providing the means for these enterprises to prosper, we can ensure that the greater economy remains healthy.

A key element to this purpose-driven process is technology: thanks to the growth of digital and mobile technology, business owners have access to more and more information and are able to make informed supply decisions that suit their requirements – voting with their wallets. Service companies are able to harness new insights from clients’ data, analysed using artificial intelligence, to provide better services and enhance the customer experience.

It is imperative to leverage innovation and digitisation as new technologies offer the potential to transform the lending sector.  Innovation has driven numerous services designed to support borrowers and eliminate the pain-points they may have experienced previously when seeking credit arrangements.

Setting out the complex reasons for why the ethical approach works is challenging, but trust – between a lender, its borrowers and its employees – is core to the explanation. Lenders must be a trustworthy partner to borrowers because trust is the basis of any successful long-term, mutually-beneficial relationships.  The SME sector in Singapore can thrive if it is driven by a model of sustainable lending driven successful partnerships between lenders and borrowers and underpinned by innovation and responsibility.